Purchasing Trends: How To Encourage Your Consumers To Continue Buying Local

Consumer purchasing behaviour, as we knew it, changed dramatically during 2020 and 2021.  One particular aspect of this, for SMEs, was the rate at which online shopping accelerated as well as a renewed focus on buying local.  With the loss of physical shops and spaces, customers quickly turned to the digital world to satisfy this need. 

The online trend and buying local has continued into 2021 which is no surprise given the lockdowns that were symptomatic of this year. 

Shops however have now slowly been allowed to open and we are entering, arguably, the busiest time of the year for many….yes, Christmas!  In fact, anecdotal evidence suggests that, for some, up to 60% of annual sales are generated during this period.

In order to maximise the potential for sales over the next few months (and of course beyond), we discuss what we can say about last 18 months in terms of consumer behaviour. We also highlight emerging trends and ideas that can be incorporated into your business going forward.

Contents

• Consumer Purchasing Trends in 2020.
• Consumer Purchasing Trends for SMEs in 2021.
• The Future of Customer Buying Behaviour.
• Campaigns and Funding for SMEs.

Consumer Trends in 2020

Due to the nature of the circumstances in 2020, it is impossible to be able to analyse it in the same way compared with other years.  It didn’t follow ‘normal’ cyclical patterns while buying behaviour followed unseasonal trends.  

There are a number of patterns that have emerged over the last year and a half.  We list some of these below.

Accelerated Growth in Online Activity and Purchases

• Retailers and other high street businesses (with digital function) experienced an increase in online sales of 56% in comparison with Christmas 2019.
• Unsurprisingly, retailers of food saw a rise of 3% in terms of sales as they benefited from being an essential service and also additional trade while parts of the hospitality sector were closed.
• 53% of Irish SMEs, who did have an established online presence, experienced renewed vigour from consumers who proactively wanted to support local businesses (Centre for Retail Research). 
• E-commerce revenue rose by 159%! This is particularly significant when compared with the average annual growth of 32%, 2017-2019 (Wolfgang, 18th February 2021). 

Online Behaviour By Demographics

• Nearly seven in ten, or the equivalent of 69%, internet users bought goods and/or services online in 2020. This compared to 63% in 2019.

• In the three months prior to interview 85% of internet users, aged between 30 and 44 years, bought goods and/or services online.

• While two thirds, or the equivalent of 68% of those aged 45 to 59 years made online purchases.

• The biggest increase was witnessed in those aged 60 to 74 years. 52% made an online purchase in the previous three months of 2020 in comparison with 39% in 2019.

What Did Consumers Buy Online in 2020?

• Firstly, 23% of respondents indicated that they have never bought or ordered goods online in 2019. This has decreased to 13% in 2020.

• More than six out of ten internet users, purchased clothes (includes sports clothing), shoes or accessories (includes bags, jewellery, etc.).

• Within the three months prior to the survey, more than one quarter (26%) bought cosmetics, beauty or wellness products online.

• While 28% bought furniture/home accessories online.

• 15% or one in seven bought personal hygiene or cleaning products.

• 9% purchased medicine (excluding prescription) and dietary supplements (including vitamins).

Online Purchase Frequency in 2020

• 21% of internet users made in excess of 10 purchases in 2020, compared with 14% in 2019.

• 19% bought between 6 and 10 purchases in 2019 while this figure was 21% in 2020.

• However, the number of three to five purchases declined from 38% in 2019 to 27% in 2020.

(Source Credit: CSO).

Knock on Effect for Essential Shops in Local Areas

• While there has always been a degree of loyal support for communities prior to 2020, it became a much more widespread and shared phenomenon of late. This was, in part, borne from necessity but also became conscious choices based on emotional factors. This has led to smaller stores in residential locations seeing a total increase of 7.2%.

New Habits and Trends

• The home environment became a major focus of attention due to the enforced time spent there.  Therefore, household goods, hardware, paints, furniture, lighting and floor coverings as well as dramatic improvements to outdoor spaces as well experienced out-of-season sales.
• Sales of computers and telecoms dropped by almost 22% at Christmas. 
• Different phases in terms of eating habits were evident during this time and they varied significantly from comfort to healthy (The Grocer).
• The term ‘homebody economy’ has since emerged from 2020.  This is in response to the change in people’s consumption patterns. It is also exemplified in the number of recipe searches that were carried out in 2020.  
  • In 2019, it was 4% while in 2020 it rose to 68%.
  • In the UK, the most searched for recipes were for bread, dinner and cocktails.  Although the winner by far was baking! 

Revived Consumer Focus on Buying and Spending Locally

• Stay local and buy local is not a new mantra for small businesses. It has become more commonplace however. Driven by the physical restrictions and for emotional reasons it experienced revived interest and appealed to a wider captive audience.  
• Research shows that purchasing decisions were made on the basis of:
  • The desire to demonstrate solidarity.
  • Having a greater sense of trust in local businesses.
  • Consumers consider local retailers to be more reliable. 
• Pre 2020, the international market would have received the majority of e-commerce spend (estimated to be in the region of €16 billion) (RTE, 20th August 2020).

Where Did Consumers Buy From in 2020?

• 73%, or almost three quarters of those surveyed purchased goods from national sellers in 2020.

• Whereas 68% purchased from other sellers within the EU in 2019. This decreased to 56% in 2020.

• 37% of internet users in 2017 bought from sellers from the rest of the world compared with 38% in 2020.

• Almost one fifth (19%), made a purchase online from a private seller that featured on platforms such as eBay, Facebook marketplace etc.

Growth in Digital Adoption Rate by SMEs

• There are over 240,000 small to medium sized businesses in Ireland and the number who either developed an online presence during that time or who enhanced their digital capabilities increased exponentially (RTE, April 2020).

Consumer Purchasing Trends for SMEs in 2021

Ok, we know that 2020 was a record year for consumer online activity but can this be maintained and what should small businesses expect?

It’s still difficult to be certain as typical predictive models can’t be applied under the current economic conditions.  Likewise, information can vary from one source to another.  

Thus far though, estimations suggest that:

• Online shopping is expected to continue although not at the same levels as the previous year.   This would make sense given that physical stores are open and are hopefully expected to stay that way. 
• In 2021 (Ireland), e-commerce revenue is projected to be in the region of $4,496 million or the equivalent of approx. €3.8 million.
• The largest category is fashion which is expected to generate volumes worth $1.321 million or €1.139 million.
• The average revenue per user is anticipated to be $1,276.34 or €1,100 while user penetration is predicted to be 70.7%.
• 73% of purchases are supposed to be domestic with 37% of these transactions made by card (Statistica, Ireland).
• In the first quarter of 2021, consumer spending was €23,605 million.  This increased to €26,569 million in the second quarter (CSO).
• In a survey by KPMG, ‘Irish consumer trends post covid’ 
  • 86% of respondents were motivated by a company’s integrity. Therefore, the focus remains on ethical retailing and a philanthropic ethos. 
  • 93% placed value on a company’s ability to resolve issues efficiently.

Without getting into any of the other complicated issues that have occurred, such as Brexit, it is worth noting how trends have been performing elsewhere including the UK and US.

UK Trends

Based on what is the current scenario, research from VoucherCodes and the Centre of Retail Research (CRR) are speculating that:

• Christmas retail sales are set to reach £78.7bn this year.
• The average British household expected to spend a whopping £821.25 each on Christmas (Start Ups, May 2021).

Global Trends

In terms of the global context:

• Sales are expected this year to exceed $1 trillion and $259 billion in the US.  
• However it is predicted that all players in the market (consumers, suppliers, retailers) will experience rising costs because of issues with manufacturing, staff and logistics.
• Commerce is anticipated to increase by 7% year-on-year for November and December, compared with 50% in 2020.  
• It is estimated that the US will see a rise of 10% in terms of e-commerce, compared with 43% in 2020 (Salesforce). 

The Future of Customer Buying Behaviour

We have an indication of what’s in store for the remainder of 2021 but it’s always better to plan ahead beyond this year in terms of informing your strategy.  Therefore, we’ve also included here some alternative trends that should be considered.

Bricks and Clicks 

What is being recommended is an omni-channel approach, one that incorporates ‘bricks and clicks’.  This is essentially a fusion type model that incorporates both your physical and online platforms.  It can be achieved in a variety of different ways. For example, software such as Pointy can help with uploading products from your store straight on to your website.

Enhanced Customer Experience

It’s clearly important to give your customer the best experience that they can have.  This creates a positive and lasting impression with them while also helping to nurture the relationship into a long term, loyal one.  

This happens from the minute that your customer contacts you and follows through service, delivery and post purchase communication. 

Improving how your customer perceives your business is clearly very important for your reputation and credibility. Creating the ultimate experience can be achieved in very simple ways  or involve advanced technology.  It really depends on the level of investment that you want to make however attention to detail does matter.

Here are some ideas:

• Personalisation.
• Artificial intelligence – the AR mirror that Coty introduced in 2019 is an example of this whereby clients can virtually try on different styles and colours from the comfort of their salon chair.
• Flexible payment options.
• Faster delivery times.
• Seamless customer journeys – KPMG found in their study of over 18,000 customers ‘Me, My Life, My Wallet’ that a seamless digital channel was valued by customers and optimising their browsing experience.
• Human interaction was considered to be an important feature of a website.  
  • In fact, 95% of Irish respondents considered the web chat feature to be important compared with 84% who wanted to have a mobile app.

Owned Client Data

As a result of data and privacy laws, analysis and reporting of customer information is going to become much more difficult for two main reasons. 

• It’s expected to become very expensive to have access to third party stored data.
• Consumers are becoming increasingly interested in keeping their details and information private.  

The plan was for Google Chrome browser to block third party tracking cookies this year however this has been delayed until 2023. While alternatives that are geared towards being privacy friendly are considered, this will also mean that there will be an increased emphasis on owned data for marketing purposes. 

Live Streaming

Live streaming is not something new, these features are widely available through popular social media channels such as Facebook and Instagram. Live broadcasting however is expected to reach greater heights because of the instantaneous interaction that viewers can have directly with companies, and in real time.

Encouraging Your Shoppers to Continue to Buy Local

The first thing to do is to continue to spread and reinforce the message about the importance of SMEs. 

• In Ireland 2021, there were approx. 234,000 small and medium enterprises.  

• In terms of size, the vast majority are micro-enterprises that employ up to 9 people.  From 2008 to 2021, they also provided the highest value to the economy at €39 million (Statistica, 2021). 

• Retail supports around 300,000 individuals and SMEs account for approx. 65% of the workforce in Ireland.

• If consumers spent €10 locally, that is worth the equivalent of up to €50 that is reinvested into the community again (Retail Excellence, Champion Green, Irish Times).  This multiplier effect creates a circular economy in each area by providing employment, supporting communities and giving that business life.  Think of the difference that €100 can make! 

Collectively, we need to make a conscious effort to recognise and show the contribution that SMEs not only financially but also to the positive health and well being of our communities.

There are plenty of cost effective ways to spread this message and promote your business to the right audience.  We have put together some suggestions below.

Register on local network and national directories

Join business networks, these are typically free of charge.  Once you’re registered, don’t forget to share the details with your customers, where applicable, and invite them to get involved too.  

• Wicklow Naturally is an online portal that promotes accommodation providers, food & drink producers and experiences from The Garden of Ireland.  Make your new member enquiry here.
• Shop Local First Initiative in Bray has been set up to help support small business in the area.  You can feature on their listing See and Do, Eat & Drink or Stay.  All you have to do is fill out an application and submit your form.
• Shop in Wicklow Town is a directory of high street retailers and boutiques for shoppers.  
• Visit Arklow has developed a convenient reference guide for shopping and gifts.
• Buying Online features small businesses in Ireland that have a digital presence, you can register for it here.
• Doorsteps Market – is described as a one stop shop for small, independent Irish businesses and consumers.
• Market street is for unique, personal and Irish handmade gifts.  Apply to sell on Market Street here.

If you have an Irish online store

• Join Click Irish.  Membership typically costs €120 but is currently free and you receiveA directory listing.
  • eCAI membership.
  • ClickIrish badge.
  • Seminars.
  • Offers.
  • Mentors.

• Be part of the Champion Green Campaign as a business and also encourage your audience to take the pledge too. 

Create Mutually Beneficial Partnerships

Collaborate with others that are in your industry space.  Those that aren’t obviously direct competitors but will complement your own product/service offering. Not only do you help each other but you also give your respective customers added value.

Promotional Ideas

As we have said previously, there are plenty of creative ideas around. By continuing to sending positive messages, these all help to keep the momentum going for buying local products and supporting local businesses such as:

• Create offers for gift solutions ranging from €10-20.  This reflects some of the key principles that:
  • If every household spent €10 more with an Irish SME, this would generate €1 million.  
  • While, if Irish consumers spent €20 more per week, over a three month period this would raise a staggering €875 million for the local economy. 

• Share holiday themed updates but bear in mind the 80/20 rule and that is approx. 20% of your posts should be self-promotional in nature while the remainder should be informative, educational and/or entertaining.

• Create your own product specific advent calendar for the month of December.

• Promote your unique items that aren’t available from the larger multiples or high street stores.

• Use your email database to publish and promote season specific campaigns, for example, ‘Top Sellers for December’/Customer Favs.

• Improve your green credentials with a digital catalogue.

• Address the issue of unwanted gifts and give your customers the option of gift cards.

Nurture Your Customers and Their Experience

• Create a V.I.P. member programme to make your clients feel special and provides them with access to exclusive offers and promotions  This can easily be done through selective groups on Instagram and Facebook and of course your mailing list.  This is also a great way to be able to continue to communicate with your customers once Christmas is over.

• Enhance your customers’ buying experience by bringing your store into their home.  This doesn’t need to be high tech.  Something as simple as relevant content can help with this.  For example, if you sell clothes, provide a clear sizing guide to help inform them.  Upload video that will give them the showroom walk through.  Take note of the questions that your customers ask and create content that answers them.  There are lots of ways to engage with your audience.

• Research shows that a number of customers still prefer to buy their gifts in-store.  Why? Because they think there is a better return policy.  Remove this barrier by providing clear and easy ways to make this convenient for your online shoppers.

• As we have discussed, creating a positive customer experience is of vital importance.  By understanding customer pain points, you can add value by offering solutions.  On average, shoppers spend around 3 hours gift wrapping at Christmas so why not provide gift wrap or a gift wrapping service?

• Acknowledge your social media fans by rewarding them with incentives such as (digital) coupons and codes.

• Increase website traffic capacity so that your visitors can browse and navigate your site with ease.

• Use email automation to re-engage with your customers or entice those who have abandoned their cart.

Implement Best Practices

According to ECAI, around 60% of e-commerce purchases conducted in Ireland 2020 actually went to overseas sources such as Amazon and E-bay (Think Business).  Rather seeing this as a threat, you can learn from them and incorporate best practice into your own business.  

Furthermore, it has been noted that Amazon reduced their ad spend in Ireland January 2021 because of its plans to open a fulfillment centre here in order to address Brexit and delivery issues.  With less competitor ad spend, especially on a mammoth scale, SMEs can exploit this window.

Campaigns and Funding for SMEs

Campaigns and Initiatives

There are lots of initiatives that have been designed specifically to support the SME community.

Champion Green Week, for example, was held 6th – 12th September.  Again the emphasis was on driving purchases and encouraging support for local businesses.  One of the themes of the event was a range of ‘treats for a tenner’.

Small Business Saturday was originally introduced in the US and is a shopping holiday held on the last Saturday in November.  It has since been adopted by other countries and, in Ireland, this year it is planned for December 7th. It is another great way to reach out and encourage consumers to back local businesses.

Financial Support for SMEs

Funding, grants and other financial support is available to you and it is always worth checking to see what you can get help with.  This first action we would recommend, whether you are starting out or planning to grow your business, is to contact your local enterprise office. There are 31 of these located across the country and they can provide you with advice and information as well as mentoring programmes.

In addition, there is an extensive range of government supports for covid-19 impacted businesses.  Examples of this would include the Trading Online Voucher which has been designed for small businesses with up to 10 employees and helps with:

• Getting set up to trade online.
• Increasing online sales.
• Targeting new markets.

Grant support is up €2,500 with co-funding by your business, of 50%.  You will also receive training and advance on how to make the most of digital presence.

We hope this information is of use and we aspire to provide you with the right resources.  If you would like to avail of your marketing review, contact us here.